Midwestern wealth firms Rothschild, Sentinus close $5B merger

Two Illinois-based wealth management firms closed a deal that brings their combined total assets under management to nearly $5 billion, reflecting a still-hot market for M&A deals. 

Chicago-based Rothschild, a hybrid RIA and broker-dealer with roughly $4 billion in AUM which is owned by private equity firm Tin Goose Holdings, has merged with Sentinus, an RIA with roughly $1 billion of AUM based in Oak Brook, Illinois. The new entity will continue operating under the name of Rothschild, according to a press release Tuesday. The deal closed officially on July 27, a spokesperson said in an email. 

"We always knew that we had to get bigger to stay independent," Phil Johnson, the CEO of Sentinus and incoming president of Rothschild, said in an interview. While Sentinus has 10 financial advisors, Rothschild had 15, Johnson said. 

As the independent marketplace grows and competition for rich clients heats up, many smaller firms have come under pressure in recent years to consolidate. Private equity has increasingly backed the financing of those deals, according to a recent report on deals by investment bank and industry consulting firm Echelon Partners. 

Read more: RIA M&A deals slowed in second quarter

Johnson said that Sentinus had made acquisitions of its own in recent years and had grown well organically, but in the past couple of years he had taken calls from "lots of different people" to weigh the options around joining with another firm. 

Over a year ago, Johnson's team was introduced to the team at Rothschild, and eventually determined it was the right fit. "We just kept in contact and kept talking and we got to know each other.… We (understood) the advisors over there, how they do business," he said. 

Both firms had a strong client-centered culture, Johnson said. 

It also helped that Rothschild had "strategic capital" and a strong 401(k) service to offer the business-owner clients of Sentinus. That unit has around $2 billion in assets under employer retirement plans, Johnson said. 

The combined firms will primarily serve business-owner clients at various stages of wealth from mass affluent to ultrahigh net worth. The wealth of an entrepreneur can fluctuate, Johnson said — they might be worth $60 million but have only $1 million or so in investable assets because much of their wealth is tied up in their company. 

"We'll be there if they ever have a liquidity event," Johnson said of those clients. "We do a lot of executive comp plans, business succession strategies, generational wealth transfer strategies."

"We look forward to working with the Sentinus team to attract like-minded financial advisors, clients and partners," Owen Schnaper, the chairman at Rothschild and partner at Tin Goose, said in a statement. 

Schnaper added that the firms would focus on "expanding our footprint while enabling us to provide services uniquely tailored to our clients' needs."